Gold price rebounds as United States Treasury bond yields weigh on US Dollar

Gold price marches amid fears that the United States is reaching its debt limit expiration in June. A political drama ahead of that keeps traders on their toes and push them towards the risk-safety, which in turn propelled the demand for one-month US Treasury bond yields. On the same line, are the clues that the US Federal Reserve (Fed) could announce one last rate hike, worth 0.25%, in May before signaling the policy pivot.

With this, the difference between one-month and three-month US Treasury bond yields widen the most since 2001. As a result, the US Dollar Index (DXY) remains depressed near 101.30 as it drops for the fourth consecutive day.

Downbeat United States data also favors XAU/USD buyers

Apart from the concerns surrounding the US debt ceiling and the Fed, recently softer US data also weigh on the US Dollar and allow the XAU/USD to remain firmer. That said, the Federal Reserve Bank of Chicago's National Activity Index (CFNAI) remained unchanged at -0.19 versus -0.02 expected. However, the publication added that the index’s three-month moving average, CFNAI-MA3, increased to 0.01 in March from –0.09 in February. On the other hand, Dallas Fed Manufacturing Business Index for the said month dropped to 23.4 for April versus -14.6 expected and -15.7 prior.

It’s worth noting, however, that the geopolitical fears surrounding Russia and China joins the market’s cautious mood ahead of this week’s top-tier growth and inflation data to prod the Gold buyers. That said, hopes of gradual economic recovery and an upbeat earnings season allow the US Dollar buyers to stay hopeful. Furthermore, geopolitical fears surrounding Russia, due to China’s alleged support to Moscow in fighting with Ukraine, as well as amid the Western readiness to increase sanctions on the Oil-rich nation, prod the market’s cautious optimism and put a floor under the US Dollar price.

Looking forward, US Conference Board’s (CB) Consumer Confidence gauge for April, expected to remain steady near 104.1 versus 104.2 prior, will be important for the intraday directions of the DXY. However, major attention will be given to US Q1 GDP, US Core PCE Price Index and the yields for a clear guide.